PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2383 "(6) TREATMENT OP CERTAIN CONTRACTS WITH MORE THAN ONE INSURED.— I f — "(A) a contract provides a death benefit which is payable only upon the death of 1 insured following (or occurring simultaneously with) the death of another insured, and "(B) there is a reduction in such death benefit below the lowest level of such death benefit provided under the con- tract during the 1st 7 contract years, this section shall be applied as if the contract had originally been issued at the reduced benefit level." (b) EFFECTIVE DATE. — The amendment made by subsection (a) 26 USC 7702A shall apply to contracts entered into on or after September 14, 1989, note. PART VI—TAX-EXEMPT BOND PROVISIONS SEC. 7651. TREATMENT OF HEDGE BONDS. (a) IN GENERAL.—Section 149 (relating to bonds must be registered to be tax-exempt; other requirements) is amended by adding at the end thereof the following new subsection: "(g) TMIATMENT OF HEDGE BONDS. — "(1) IN GENERAL.— Section 103(a) shall not apply to any hedge bond unless, with respect to the issue of which such bond is a part— "(A) the requirement of paragraph (2) is met, and "(B) the requirement of subsection (f)(3) is met. "(2) REASONABLE EXPECTATIONS AS TO WHEN PROCEEDS WILL BE SPENT.—An issue meets the requirement of this paragraph if the issuer reasonably expects that— "(A) 10 percent of the spendable proceeds of the issue will be spent for the governmental purposes of the issue within the 1-year period beginning on the date the bonds are issued, "(B) 30 percent of the spendable proceeds of the issue will be spent for such purposes within the 2-year period begin- ning on such date, "(C) 60 percent of the spendable proceeds of the issue will be spent for such purposes within the 3-year period begin- ning on such date, and "(D) 85 percent of the spendable proceeds of the issue will be spent for such purposes within the 5-year period begin- ning on such date. "(3) HEDGE BOND. — "(A) IN GENERAL.—For purposes of this subsection, the term 'hedge bond' means any bond issued as part of an '"* issue unless— "(i) the issuer reasonably expects that 85 percent of the spendable proceeds of the issue will be used to carry out the governmental purposes of the issue within the 3-year period beginning on the date the bonds are issued, and '• "(ii) not more than 50 percent of the proceeds of the issue are invested in nonpurpose investments (as de- fined in section 148(f)(6)(A)) having a substantially guaranteed yield for 4 years or more. "(B) EXCEPTION FOR INVESTMENT IN TAX-EXEMPT BONDS 4-• NOT SUBJECT TO MINIMUM TAX. —
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